The Think Method

Tuesday

Nov 27, 2012 at 12:01 AMNov 29, 2012 at 4:08 PM

I spent a little time chatting with an MIT economics professor, who has noted that the administration’s economic policy is now evident–it entails using Professor Harold Hill’s Think Method. In short, if you believe that the economy is improving, then it will. Submitted as evidence, he noted, is the consumer confidence index. this is a strange devise by which people are asked if they are feeling confident enough in the economy to go spending, and then the number of people who say “yes” somehow are expected to indicate a general mood of the economy. The problem with this index is that it doesn’t account for mass delusion and the madness of crowds. As the Professor was pointing out, the people who feel that they want to go out and shop, and who are certain that jobs are on the way, may not be reacting to reasonable indices, but rather to a sense of euphoria unrelated to the economy. If 53% of the people feel like going out to shop, it may reflect the same 53% who voted for the administration, and the surge of confidence may be based upon a deluded sense that the administration has a plan to make things better, and that jobs will magically appear as a result of an election. the problem is, that this 53% tends not to be the people who generate economic activity. So if 47% of Americans are down on the economy, and those are the 47% who create the jobs, and create the economic factors for recovery, no amount of “confidence” amongst consumers has any meaning whatsoever. But it is a great idea if all else fails–let’s just think jobs, and maybe they will appear.

Rob Meltzer

I spent a little time chatting with an MIT economics professor, who has noted that the administration’s economic policy is now evident–it entails using Professor Harold Hill’s Think Method. In short, if you believe that the economy is improving, then it will. Submitted as evidence, he noted, is the consumer confidence index. this is a strange devise by which people are asked if they are feeling confident enough in the economy to go spending, and then the number of people who say “yes” somehow are expected to indicate a general mood of the economy. The problem with this index is that it doesn’t account for mass delusion and the madness of crowds. As the Professor was pointing out, the people who feel that they want to go out and shop, and who are certain that jobs are on the way, may not be reacting to reasonable indices, but rather to a sense of euphoria unrelated to the economy. If 53% of the people feel like going out to shop, it may reflect the same 53% who voted for the administration, and the surge of confidence may be based upon a deluded sense that the administration has a plan to make things better, and that jobs will magically appear as a result of an election. the problem is, that this 53% tends not to be the people who generate economic activity. So if 47% of Americans are down on the economy, and those are the 47% who create the jobs, and create the economic factors for recovery, no amount of “confidence” amongst consumers has any meaning whatsoever. But it is a great idea if all else fails–let’s just think jobs, and maybe they will appear.